(CNN)The black-clad, masked British ISIS terrorist who has taken center stage in the group's hostage videos appeared in a new video on Tuesday threatening the lives of two Japanese hostages, Kenji Goto Jogo and Haruna Yukawa.

The terrorist explained that they would be executed in 72 hours if ISIS isn't paid $200 million.

Peter Bergen

Japanese Prime Minister Shinzo Abe responded on Tuesday saying the treatment of the hostages was "unacceptable."

ISIS had similarly demanded 100 million euros (roughly $132.5 million) in ransom for the release of James Foley, the American journalist who was killed by the terrorist group in Syria in August.

Like the $200 million demand for the Japanese hostages, the Foley demand was never a serious negotiation effort as it far exceeded the amounts of money paid for hostages held by jihadist militant groups in the past, which typically have ranged up to several million dollars.

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But the demand does shine a light on two uncomfortable facts about "Kidnap & Ransom," or K&R, the dark netherworld of professionals who work to negotiate between murderous groups such as ISIS and the terrified families whose loved ones have been kidnapped. It also includes their worried employers and Western governments such as France that will pay ransoms, and other governments, notably the United States and the United Kingdom, that will not.

The first uncomfortable fact is that if you pay a ransom, a hostage is more likely to be released. The other is that every time a ransom is paid it increases the chance that other hostages will be taken to help fill the coffers of a terrorist group.

According to an investigation by The New York Times, al Qaeda and its affiliates have netted at least $125 million in ransoms since 2008. That finding is similar to a 2012 U.S. Treasury estimate that $120 million had been paid to terrorist organizations during the previous eight years.

Much of this revenue reportedly comes from France. French media reported that the government had paid 20 million euros (about $28 million, reflecting last year's exchange rate) for the release of four employees of a French nuclear firm. They were held by an al Qaeda affiliate for three years in northern Niger and were released last year.

The French government denied paying a ransom, but The New York Times indicated -- based on reports from Le Monde and Agence France-Presse -- that France did pay in that case and has paid out a total of some $58 million to al Qaeda or related groups.

Not surprisingly, the Times also found that of the 53 hostages known to have been taken by al Qaeda and its affiliates during the past five years, a third were French.

The French government's purported policy of negotiating with militant groups for the release of kidnapped citizens does appear to work. Four French journalists -- Nicolas Henin, Pierre Torres, Edouard Elias and Didier François, who were kidnapped in Syria last year by ISIS -- were released near the Turkish border in April, blindfolded and with their hands bound.

One of those hostages, Henin, had been held by ISIS alongside Foley. Henin is free, and Foley is dead.

These are the facts that policymakers must confront as they consider what to do about the other Western hostages still held by ISIS.

So far, ISIS has executed a number of Western hostages, including American journalist Steven Sotloff, and U.S. aid worker Peter Kassig.

ISIS continues to holds one American female aid worker. CNN is withholding her name.

For the hostages held by ISIS, there is always the chance that their governments will mount a rescue operation as the United States did in Syria in July 2014 to try and rescue Foley and the other Americans. That mission failed because the hostages had been moved from a location they had been kept in for some months.

There is also the possibility that hostages could escape, as American photographer Matthew Schrier did last year when he managed to crawl out of a window of the prison where he was being held in in the Syrian city of Aleppo by an Islamist militant group.

But such escapes are rare, and while successful rescue efforts do happen, they are fraught with risks for the hostages.

Linda Norgrove, for instance, a British aid worker held by the Taliban in Afghanistan in 2010, was killed in a U.S. rescue operation, likely by a grenade that exploded near her.

If there's not an escape or a successful rescue effort, Western governments whose citizens are held by ISIS have only the options of either a negotiation involving ransom or the real possibility that their hostages may be executed.

This is the sobering choice that has faced President Barack Obama and his national security advisers and now faces the Japanese Prime Minister.

Last year, Obama ordered a review of U.S. hostage policy, which is never to negotiate with terrorists.

The review is reportedly supposed to examine issues such as "family engagement, intelligence collection, and diplomatic engagement policies." But that seems to be rather missing the point. The real issue is: Will a ransom be paid, or not?

An area of possible wiggle room would be to leave the door open so that ransoms for Americans could be allowed to be paid -- not with U.S. government funds but with private donations. In such a case, the government would simply look the other way when private donations were used to free an American hostage, as paying money to a designated terrorist organization is a crime in the States.

This is the least bad solution to a terrible quandary, which is if that if you don't pay the ransom the hostage dies, and if you do pay the ransom, you are helping a terrorist organization.